Is now the time to release personal assets tied up as security?

People often use personal assets as security to obtain the finance they need to launch and grow a business. But there are inherent risks to this approach.

Obtaining finance as a small business can be wrought with challenges, which is why some entrepreneurs choose to offer up their personal assets as security on loans. The family home is commonly used as collateral.

Everything is fine when business is booming, but what happens when you hit a rough patch? You could be at risk of losing both the organisation and your home if you fall behind on loan repayments.

Recent research has indicated Australians may be struggling to keep on top of their personal and professional debt obligations, so now may be a good time to examine the structure of your existing loans.

Insolvencies on the rise in Australia

The latest National Australia Bank SME Business Survey for the March 2018 quarter paints a largely rosy picture for organisations, with confidence and commercial conditions remaining above the long-term average.

However, nearly 32,000 Australians went bankrupt in 2017, according to Dun & Bradstreet figures. This figure was up 6.1 per cent on 2016, following a 4.7 per cent increase the previous year. Meanwhile, corporate insolvencies were up 5.5 per cent in the March quarter, when compared to the same three-month period in 2017.

But enough of the doom and gloom. What does this mean for business owners whose personal assets act as a guarantee for a loan? Even if your SME is currently performing well, examining ways to mitigate risks to you and your family should always be a priority. Debtor finance could be a solution.

How does Debtor Finance help me release personal assets?

Whether you are a sole trader, part of a partnership or a company director, you could be personally liable for a business's financial shortcomings.

Debtor finance can help you restructure your current loan facilities to ensure the release of your personal assets, while also offering the funding necessary to sustain or grow the business.

Alternative funding solutions aren't just for business owners who already have personal assets up as collateral. Debtor finance, also known as Invoice Discounting could be available if you are struggling to obtain credit elsewhere and don't want to risk the family home in the first place.

Do you want to future-proof your business and avoid the personal ramifications of a cash flow crisis?